E Commerce: It's Clicking

Marketing hoopla aside, 1998 will be remembered as the year E-commerce went mainstream. But Internet selling's apparent success--estimates range from $2 billion to as high as $5 billion for the holiday season--should not come as a surprise. Indeed, the groundwork had been laid all year. And despite some glitches, odds are that growth will keep climbing, with total sales to consumers expected to top $18 billion for all of 1999, according to Forrester Research Inc., up from $7.8 billion this year. By 2003, Forrester says, sales could reach $108 billion, accounting for 6% of consumer retail spending. And those are conservative estimates.

Three things happened last year to give E-commerce a huge boost. First, more households bought cheap PCs and came online. Second, more big-name retailers, such as Gap, Macy's, and Nordstrom, expanded or put up new shopping sites, supplementing pioneers such as Amazon.com and giving customers a much wider selection of goods. Finally, the sites were dramatically improved over the course of the year, making Net shopping far easier. So--click!--it all came together at Christmas. There were, to be sure, problems, as some servers were unable to handle the load. And some sites couldn't quite supply the goods to keep up with demand. But Internet retailers such as eToys and Amazon tried to create goodwill with gift certificates and information about delays and problems. If first-time customers had a poor experience, it could be some time before they dip a toe in the water again. But for those who had a pleasant experience there's no turning back. Nothing beats the convenience of E-commerce.

Before it's here, it's on the Bloomberg Terminal.